A recent industry report concluded that remodeling could lead to high returns for those planning to sell their homes.
According to the 2014 Cost vs. Value Report, several remodeling projects can return more than 78 percent of their costs upon resale. Many of the projects include exterior replacement, which realtors rated as generating the biggest bang for the buck. The 2014 Cost vs. Value Report was prepared in collaboration with the National Association of Realtors and published by Hanley Wood LLC, publisher of Remodeling magazine.
Exterior projects such as entry-door and window replacements can recoup homeowners a substantial amount upon resale, according to the report. These types of projects are essential to home maintenance, so the good news is many homeowners are already doing them. Another plus is that these projects are generally inexpensive, and in addition to keeping your home functioning properly, they add instant curb appeal. This is especially important if you are considering selling.
The 2014 report compared construction costs with resale value for 35 midrange and upscale remodeling projects in 100 markets across the country. Realtors provided their insight into local markets and buyer home preferences within those markets. Overall, realtors estimated that homeowners would recoup an average of 66.1 percent of their investment in 35 different improvement projects, an increase of 5.5 points over last year and the largest increase since 2005. For the second consecutive year, the value of remodeling is up for all of the projects included in the survey.
Eight of the top 10 most cost-effective projects nationally in terms of value recouped are exterior projects. Realtors judged a steel entry-door replacement as the project expected to return the most money, with an estimated 96.6 percent of costs recouped upon resale. It’s consistently the least expensive project, costing only slightly more than $1,100 on average.
Two garage-door replacement projects were also in the top 10, both expected to recover more than 82 percent of costs. Rounding out the top exterior projects were two window replacement projects. Wood-window replacement and vinyl-window replacement recoup more than 78 percent of their costs.
In addition to the exterior projects, two particular interior remodeling projects can recoup substantial value at resale. An attic bedroom is expected to return 84.3 percent of costs and a minor kitchen remodel is estimated to recover 82.7 percent of costs. The improvement project estimated to return the least at resale is a home office remodel, estimated to recoup only 48.9 percent.
Each neighborhood differs, and the desirability and resale value of a particular remodeling project varies. That’s why it’s important to work with a realtor. A realtor is the best resource for helping homeowners decide which improvement projects offer the most return upon resale in your market. They have a unique understanding of local markets, desirable home features and buyer preferences.
Myron Von Raesfeld is president of the Santa Clara County Association of Realtors. For more information, call (408) 445-8500 or visit sccaor.com.